account escrow
Yes, the cash component of the escrow account in the delisting offer process can be maintained in an interest-bearing account. However, it is important to note that the interest earned on the escrow account must be credited back to the shareholders who tendered their shares in the delisting offer, and cannot be retained by the company or the merchant banker managing the delisting offer.
As per the SEBI (Delisting of Equity Shares) Regulations, 2009/21, the company is required to deposit an amount equal to at least 50% of the total delisting offer amount in the escrow account, and this amount must be maintained until the delisting process is completed. The remaining 50% of the offer amount can be deposited in the escrow account at a later stage, depending on the progress of the delisting process.
The cash component of the escrow account can be invested in liquid instruments such as fixed deposits or money market instruments to earn interest, but the interest earned must be credited back to the shareholders in proportion to their shareholding in the company at the time of the delisting offer. The interest earned on the escrow account cannot be used for any other purpose or retained by the company or the merchant banker.
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As per SEBI (Delisting of Equity Shares) Regulations, 2021, the escrow account in the delisting offer process can only be maintained in a scheduled commercial bank account, and not in an interest-bearing account. This is to ensure that the cash component of the escrow account remains readily available to the shareholders who have tendered their shares for delisting. The regulations also provide guidelines for the maintenance of the escrow account and the release of funds from it.